Stocks edge higher as government shutdown begins

In this Wednesday, Sept. 25, 2013, photo, trader Robert McQuade works on the floor of the New York Stock Exchange. (Richard Drew, Associated Press)

NEW YORK — Investors stayed calm on the first day of a partial government shutdown Tuesday.

A long-running dispute in Washington over President Barack Obama's health care law caused a deadlock over the U.S. budget, forcing about 800,000 federal workers off the job and suspending all but essential services. With the Republican-controlled House of Representatives and Democratic-controlled Senate at a stalemate, it was unclear how long a temporary bill needed to finance government activities would be stalled.

Despite the political wrangling, investors didn't push the panic button. That suggests that, at least for now, they aren't anticipating that the stalemate would cause enough disruption in the economy to threaten a gradual U.S. recovery and a four-year bull run in the stock market.

"The trend of the economy appears to be in a positive direction," said Michael Sheldon, chief market strategist at RDM Financial Group. "Unless this really gets ugly, we think the markets should start to look ahead to what we believe should be better economic data over the next six to 12 months."

In the latest encouraging news on the economy, a private industry group reported Tuesday that U.S. manufacturing expanded at the fastest pace since April 2011 last month on stronger production and hiring.

The Dow Jones industrial average was up 48 points, or 0.3 percent, to 15,179 after the first hour of trading. The Standard & Poor's 500 rose nine points, or 0.6 percent, to 1,690. The Nasdaq composite rose 23 points, or 0.6 percent, to 3,795.

In government bond trading, the yield on the 10-year note rose to 2.64 percent from 2.61 percent late Monday.

The price of oil fell 70 cents, or 0.7 percent, to $101.63 a barrel. The price of gold fell $31, or 2.3 percent, to $1,296 an ounce.

The dollar fell against the euro and the Japanese yen.

Among stocks making big moves today:

— Merck rose $1.47, or 3.2 percent, to $49.10 after the drugmaker said it plans to cut another 8,500 jobs as part of a plan to reduce its annual costs by about $2.5 billion by the end of 2015.

— Walgreen rose $1.93, or 3.6 percent, to $55.73 after the drugstore chain said its fiscal fourth-quarter earnings soared 86 percent after it booked gains from its method of inventory accounting and its acquisition of a stake in European health and beauty retailer Alliance Boots.